‘So much competition’: North Texas retailers go head-to-head over available space

BY BRANDI SMITH

When Black Sheep Coffee opens its first location outside of the United Kingdom later this spring, it will be in Texas. The company, founded by college roommates Eirik Holth and Gabriel Shohet in 2013, currently boasts more than 70 UK locations.

“They have decided to come to the United States with Dallas and Austin being their first markets here,” shared Steve Zimmerman, Partner and Managing Director at Dallas-based The Retail Connection.

Black Sheep Coffee set itself apart in the UK by being the first to use specialty grade Robusta coffee beans, which pack twice the caffeine punch. The company also adheres to a strong sense of social responsibility when it comes to sourcing those beans, packaging its products and connecting with its local communities.

While traditional coffee shops open and close early, Zimmerman said Black Sheep Coffee will be open almost 24 hours a day. In addition to its morning coffee service, it offers cocktails and a diverse menu for the late-night crowd.

Work is already underway to transform the former BBVA bank at 6240 E Mockingbird Lane in Dallas into the US’s first Black Sheep Coffee. It should be open by May. The plan is to announce additional locations soon, but Zimmerman acknowledged that is a challenge now as a number of coffee concepts compete for space through North Texas.

“Lots of coffee users,” Zimmerman laughed.

Black Sheep Coffee is up against La La Land Kind Coffee, Black Rifle Coffee, Dutch Bros Coffee, Black Rock Coffee and more.

“There are probably eight to 10 of them and they’re all looking for basically the same space,” explained Zimmerman. “They all want pad sites and drivethrus. Some have very limited indoor seating or no indoor seating.”

When you dig to find the root of the influx of new coffee shops, you also find the cause of the space scarcity: the COVID-19 pandemic. Fewer people are going into the office, opting instead for something casual, such as a coffee shop. Meanwhile, more than a year of supply chain issues that helped drive up construction and labor costs make it much more expensive to build even something as simple as a coffee kiosk.

“It’s just a matter of finding space,” Zimmerman said. “Not just finding space, but finding space they can afford.”

That obstacle is one many retailers face. Research from Weitzman reveals DFW wrapped up 2022 with a retail occupancy rate hovering around 93 percent, among the strongest rates ever for the market.

While North Texas offers more retail inventory than any other Texas metro area, the Texas Snapshot report added, “The market also benefited from the backfilling of anchor vacancies and an extremely conservative development climate that limited the overhang of vacant space.”

Demand, Zimmerman emphasized, is not a concern.

“We’re still getting a lot of opportunities,” he said. “The real trophy locations are really being bid up because there’s so much competition.”

Retailers, including Black Sheep Coffee, recognize the value of Texas, which now boasts a population of more than 30 million.

“We’ve always said we’re blessed to be in Texas and specifically to be in DFW,” said Zimmerman.

Even though home starts are down, they’re coming down from an all-time high and retailers are following the rooftops. The challenge ahead is finding rooftops of their own in a highly competitive market.

“It’s an interesting phenomenon,” Zimmerman said.